Denver-based Qwest Communications International Inc., which in May abandoned its three-month battle to buy MCI Inc., reported a narrower quarterly loss yesterday as it boosted revenue and cut costs but labored under a heavy debt burden.

The nation's fourth-largest telephone company said its second-quarter loss shrank to $164 million (9 cents a share) from $776 million (43 cents) a year earlier, while revenue rose to $3.47 billion from $3.44 billion. Operating costs fell 14.6 percent, to $3.24 billion.

The company had hoped its planned acquisition of MCI would lessen its dependence on the shrinking residential telephone market by bringing it corporate and government clients, as well as a slice of the Internet "backbone" that carries data traffic.

Having lost MCI to Verizon Communications Inc., the largest U.S. local telephone company, Qwest has sought to extract more profit from the 14 Western and central states it serves and to increase earnings from its long-distance, cell phone, data and Internet services.

Qwest chairman and chief executive Richard C. Notebaert told Wall Street analysts the company was still interested in acquisitions but saw "a lot of potential within our core business."

"We may pursue acquisition or merger opportunities that make sense," Notebaert said, according to a transcript of a conference call with analysts. "But we're not in any hurry."

Notebaert said further trimming the company's $14.7 billion debt -- taken on chiefly to build its national fiber-optic network -- remained a priority.

Like the other regional telephone giants, Qwest is seeing its core business erode as customers switch to mobile phones or obtain local service from cable companies and Internet-based providers.

Qwest said operating revenue from local telephone service shrank to $1.62 billion from $1.68 billion, while long-distance revenue rose to $547 million from $493 million. Data and Internet services revenue increased to $996 million from $969 million.

Qwest, which does not have its own mobile phone network but provides service under a deal with Sprint, said its mobile revenue inched up to $130 million from $128 million.

Qwest's chief is Richard C. Notebaert.